To mitigate the effects of global warming and environmental pollution, the transition from internal combustion engines (ICEs) to electric engines is progressing; led by many of the world’s developed countries and leading automobile manufacturers. In the midst of this trend several media reported that the Japanese EV venture GLM had singed a large financial agreement with the Hong Kong based investment company O Luxe Holdings. GLM conducts an automobile OEM business developing innovative electric vehicles (EVs), and a unique “platform business” from which third parties can purchase chassis platform to develop their own EVs. GLM’s mission is to expand into the global EV market through the application of advanced technology from Japan. UTEC Partner Keisuke Ide and GLM’ CEO Hiroyasu Koma discuss GLM’s past and future.
03 STORY GLM UTEC
Changing the world with “Simply Astonishing EV” from Japan
GLM. Co.,
ltd. CEO
Hiroyasu Koma
UTEC Partner
Keisuke Ide
ltd. CEO Hiroyasu Koma UTEC Partner Keisuke Ide
PROLOGUE
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SECTION01 : Creating a “Simply Astonishing EV”
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SECTION01
Creating a “Simply Astonishing EV”
GLM’s OEM business became well known with the release of the sport EV “Tommykaira ZZ”. Original Tommykaira previously known as the “sport car of dreams” powered by an ICE, and was brought to life as an EV by GLM. The birth of Tommykaira ZZ was in 1997, developed by the automobile tuning manufacturer Tomita Dream Factory. The name Tommykaira comes from the combination of the CEO of Tomita Dream Factory, Mr. Yoshikazu Tomita and the Vice President Kikuo Kaira. Designed without features such as air conditioning and power steering, the Tommykaira had a design solely focused on its running performance, which made it the most exciting model for automobile fanatics. The Tommykaira was initially manufactured in the United Kingdom and then imported to Japan. However, in 1999, due to the revision of the safety standards by the Ministry of Transport (currently the Ministry of Land, Infrastructure, Transport and Tourism (MLITT)), the car was forced to make major structural changes in order to comply. The Tommykaira was then discontinued, missed by many of its fans.
- Koma:
- The development of Tommykaira ZZ was our statement to people who had doubts if it was possible to make an automobile startup venture. The fact that we were able to get approval from the MLITT and sell the car, added value to the GLM brand and proved that our state-of-the-art technology could be commercialized. Furthermore, this was the first case of a startup manufacturing and selling an EV and gave momentum to the development of the “GLM EV4” the newest model of EV sold by GLM in 2017.
- Ide:
- The Tommykaira ZZ was not only a flagship vehicle for GLM but also a proof to showcase the Company’s technology and an important marketing tool to advance the sales of GLM’s EV manufacturing platform. As an investor, the completion of the Tommykaira ZZ was the first milestone.
Through the development of Tommykaira ZZ, which is currently manufactured in a medium-scale production system, GLM has established a network of supply and alliance partners with more than 200 companies. This network of companies is the foundation for creating EVs with high-quality functions and designs and is something that is very difficult to create for a startup..
- Koma:
- We would like to continue to propose “Simply Astonishing” EVs to the world. We started GLM with the desire to build automobiles that are environmentally friendly. However, not everyone chooses an EV just because it is "economical" or "environmentally friendly". People want to drive a car that excites them. For us to truly make an impact at the global scale, it is of utmost importance to create exciting products and appeal to people's hearts. GLM's automobile manufacturing is to propose this kind of EVs to the world.
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SECTION02
GLM provides a key solution to enable a function-specific business model in the automobile industry that is traditionally vertically integrated.
Manufacturing an automobile is like putting together an orchestra. The chassis, power train, control unit, etc in a EV have to maximize their value and come together to harmonize. This is how an exciting automobile is born. GLM made the technological knowledge and experience accumulated in the OEM business into a chassis package that can be purchased off-the-shelf. By providing this package to third parties, we are developing a "platform business" that enables various companies to develop original EVs using GLM technology.
- Koma:
- We will provide the ecosystem and the developmental know-how, leveraged by the network of 200 partner companies, to domestic and international EV makers. Clearing the high level of safety standards set by the MLITT is not an easy feat, requiring extremely high engineering skills. By providing this know-how through our platform business to EV makers around the world, we hope to contribute to the growth of the EV industry. In July of 2017, we announced our capital alliance with a Hong Kong based investment company and now have world-class funding to support our activities. We believe that we have laid the foundation spread our technology to the world.
Furthermore, CEO Mr. Koma aims to stir the automobile industry with unprecedented number of new EV entrants, by providing the platform business, as development of chassis have been a huge entrance barrier to the industy..
- Koma:
- Since we are a small venture with limited funds, we cannot suddenly scale up to mass-produce hundreds of thousands of units. However, if GLM technology is adopted at the heart of major automobile manufacturers, GLM’s technology will be integrated and mass-produced with existing manufacturing assets. The Japanese automobile industry is ａ highly technically advanced environment, but in reality, the manufacturing happens in "Keiretsu." In other words, it is a vertically integrated business model that combines the power of the entire supply and manufacturing chain for one OEM. However, in the future, we anticipate that horizontally separated business model will prevail as the network of parts suppliers transcend the ir previous Keiretsu. We believe that our platform business is the key to such horizontal transitions and we believe that these changes will bring the amazing innovations that have taken place in the IT industry over the last two decades to the automobile industry.
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SECTION03
“An investor with two thinking caps”
UTEC Partner Keis Ide and CEO Mr. Koma met shortly after the incorporation of GLM. However, it took Keis a long time before he decided to invest in GLM.
- Ide:
- I remember I met Mr. Koma shortly after GLM’s incorporation and learned about what Mr. Koma thought of creating EVs. However, I thought a business model of becoming an OEM would not fit UTEC’s investment strategy, which is to support startups that address problems faced by the global market. Mr. Koma and I discussed thereon many times and arrived to the current business model; In anticipation of future expansion of the EV market, we will create a combination of a BtoB business, which sells chassis and drivetrains (which are essential parts for EV manufacturers), and athe BtoC business, which manufactures and sells finished vehicles that uses the chassis and drivetrain from the B2B business. Our intention was to ignite the reinvention of the business model of the automobile industry, where chassis were the holy grail of an OEM that cannot be sold to a competing OEMs, by providing flexible chassis to any OEM, large and small. Mr. Koma and I, who had witnessed the evolution of the IT industry closely, remember being very excited about our new business model which had the potential of bringing a similar scale of impact to the automobile industry.
At the start, GLM did not have management personnel. UTEC’s Keis Ide was an investor but also often times an integrated active member of the GLM team in running its business.
- Koma:
- Through interacting with Mr. Ide, we were able to reshape and better the way we thought about our business model and finance. Mr. Ide often talks about changing the “cap one is wearing”. For example, if I am troubled with fundraising, Mr. Ide would say “Look at your proposal from an investor’s point of view, the points that would bother the investor become apparent. If I was wearing the GLM CEO cap, I would propose it this way….”. Mr. Ide is an investor but was always by our side in providing advice putting himself in our shoes.
- Ide:
- Mr. Koma is a visionary and is very passionate about creating a future that is not of continuum. But the Company needs to operate continually. I believe that supporting the realization of Mr. Koma’s vision is the function of a venture capitalist and therefore I always try to suggest the kinds of process that the Company can implement to enable the vision to make a great proposal and grow the business.
There were times when development was delayed, for example during the fundraise of GLM’s series C round. At the time, Keis Ide joined Mr. Koma as an executive to convince domestic and international VC to participate. Keis Ide was also actively involved in partnership development. At a 14 hour meeting with a key partner outside of Japan, Keis Ide was with the management team the entire time to drive negotiations.
- Ide:
- Strong capital backing is a requirement to develop an automobile, and the market is of course, global. GLM has done co-developments and also capital alliances with international as well as domestic corporates and investors. GLM has received investments from Taiwanese and Saudi Arabian investors, both of which are Sovereign wealth funds. I also believe UTEC’s strong connection with the University of Tokyo and our ability to explain GLM’s technology clearly really contributed to the fundraising effort.
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FINAL SECTION Creating a new industry for automobiles
FINAL SECTION
Creating a new industry for automobiles
- Koma:
- I believe that the business model in the automobile industry will part in two ways in the future. One business model is the “provision of ownership value”, a business model centered on the provision of automobiles that excites its owners with the most advanced technologies. This business model would be aimed at the innovator and early adaptor consumers, a relatively small market. The other would be the “provision of functional value”. A business models which provides services such as ride share and rental car. My guess is that this business model will address developping markets. From now on, many consumers will not buy their own automobiles but rather buy automobile as a service. We plan to respond to this shift in the automobile industry with our platform business.
GLM’s platform business, includes "multiple EV system" that combines variation of chassis with motors, inverters, battery modules, VCUs, etc. to realize an EV system that supports the purpose of wide range of EVs. The Company also plans to implement functions that link automobiles with various external services (Vehicle to Service) and incorporates it within the road infrastructure (Vehicle to Infrastructure). In addition, more than 200 Japanese companies in the field are interested in this platform business as alliance partners. GLM is truly a technology showcase in the automotive industry bringing together the Japanese material manufacturers and parts suppliers that stand out in the world stage.
- Koma:
- Our milestone for the next 5 years is to be able to respond to the mass production scale demand from automobile OEMs with our platform business. We are already getting such talks with global automobile manufacturers from China and other Asian countries. We believe that GLM can make a significant contribution to the creation of a new automobile industry if we can create an environment in which we can build anywhere from several to millions of automobiles. Our goal is to create an ecosystem where Japanese technology companies can make great strides in the global market.
To create a new global automobile industry with “Simply Astonishing EV” from Japan, that is GLM’s Mission.